Statistics make it clear that the most effective way to boost member
adoption of online bill payment is to offer the service for free.
Panelists who participated in the Callahan & Associates Oct.
28 webinar titled "Improving Member Usage of Your Online Bill
Payment Services" unanimously supported the idea of free online
bill payment, pointing to the highly favorable demographics typically
shared by online bill payment users. However, critics question the
apparent implication that giving online bill payment to an unprofitable
member will somehow make that member more profitable. This is not
the proponents' contention at all.
To fully understand the argument in favor of free bill payment,
it's important to differentiate between the bill payment enrollee
and the long-time user. The purpose in offering free bill payment
is to cast a wide net. And in casting that wide net, credit unions
are likely to enroll their fair share of "freeloaders."
While this may happen at the outset, historical data points to
the idea that over time, these "freeloaders" will stop
using the service. Any free bill payment program must take this
into consideration. For example, panelist Nathan Schmidt, who is
the E-Services Branch Manager for Schools Financial CU, says that
any member who doesn't use his credit union's bill payment system
for 90 days is automatically dropped.
If the majority of "freeloaders" eventually drop from
the system, what's left is a concentration of demographically very
desirable members - members whose profitability more than covers
the $3-$7 the credit union spends on their bill payment service.
And because online bill payment does require some setup time by
the member, the conventional wisdom says that members are more likely
to stay with the institution where they use bill payment. This is
especially important for credit unions, given that many members
are likely to have accounts at retail banks, as well.
Certainly free online bill payment doesn't make sense for every
credit union. It's important, though, for all credit unions to fully
understand the benefits of free online bill payment before they
reach any decisions.